Mexican perspective on USMCA and trilateral importance (with David Westin)

Is there any prospect the US would do a deal with Mexico and leave Canada out?

David Westin

Geronimo Gutierrez Fernandez

We saw during the first USMCA negotiation that we ended up with a trilateral agreement because it is extremely important for North America as a region. There has never been a time that makes more sense to continue building up our North American economic region, especially adding security given the geopolitical context.

Trade negotiations are never easy, even less so with a contaminated agenda of complex geopolitical and security issues. Nevertheless, we have never been as close to losing that opportunity in the past 30 years.

Geronimo Gutierrez Fernandez

USMCA was seen as the future model agreement when it entered into force in 2020. It includes a review provision that NAFTA did not have. USMCA is not perfect but it works, and intra-regional trade has evolved favorably over the past 6 years.

If you ask industries relevant for North America, they will tell you USMCA is a fundamental tool for producing together in North America and exporting to other regions.

Geronimo Gutierrez Fernandez

About 40% of every dollar exported from Mexico to the US is actually a US company. Since USMCA's first negotiation, the US wanted to capture a bigger chunk of auto industry growth. If that is accomplished in a way that allows North American companies like Ford and GM to remain competitive worldwide, we should get to a good place within 12 months.

The US invests around $160 billion in Mexico. Mexico invests about $60 billion in the US, but normalized by economy size, Mexico actually invests more in the US than vice versa. Many Mexican companies want to invest more, and certainty of the deal for 16 years is critical.

Geronimo Gutierrez Fernandez

We have not seen the benefits of USMCA for a sufficient long period because COVID hit right when it went into effect. After stabilization, we are beginning to see a pickup in trade and employment. We are seeing trade increase even with tariffs, and investment is flowing.

Every leader wants investment in their country. The agricultural sector in the US also wants certainty because they export billions of dollars of grains to Mexico.

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